3 steps to closing the performance gap | KPMG | SG

3 steps to closing the performance gap

3 steps to closing the performance gap

The appropriate response to disruption in Engineering and Construction is a better outcome for the customer, which means higher productivity and superior performance.

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The engineering and construction industry could well be facing intense, disruptive challenges over the coming years. The appropriate response to disruption is a better outcome for the customer, which means higher productivity and superior performance.

The appropriate response to disruption in Engineering & Construction is superior productivity & performance – a better outcome for the customer.

3 steps to closing the performance gap: An integrated approach

Rationalize controls

For most owners and contractors, project governance, risk and controls remain static, manual and paper-based activities that do not report events in real time. And over time, these controls have become ever more complex and lengthy, to the extent that they bombard users with too much information and too many tasks, so that project managers struggle to make sense of the data to make meaningful decisions. The inflexible, rules-based approach can provide a straitjacket for users — especially from younger generations. Our three-point response to this challenge is:

Point 1: Assess
It’s time to take stock of all your governance, risk and control procedures and assess each one carefully. This should help you objectively and methodically assess the design and effectiveness of your overall control environment.

Point 2: Rationalize
Once the governance has been assessed, the organization should take a hard look at which controls are missing, which are inadequate, which are ‘overbuilt’, and which are simply ineffective. Newer generation workers are likely to have a fresh and critical perspective on what is needed to create a strong and effective controls environment, so it’s important to consult and involve Gen X and Y and Millennial employees.

Point 3: Rebuild
Governance should be closely aligned with the organization’s business objectives and strategy, and with the overall project environment. Any investments in technology should be evaluated to ensure they support your strategy. And, of course, all controls should be designed with the end user in mind.

Innovate with technology

Like most industries, technology lies at the heart of the future engineering and construction company. It can help attract younger talent (who may be excited by the prospects of transforming project delivery) and add much-needed transparency to project reporting. Robotics and automation should aid efficiency, and data and analytics can help to better understand trends in project delivery. But if the main players don’t take up the mantle, they could find themselves disrupted and displaced by newer entrants — as has happened in so many other industries.

Point 1: Create a technology/ data diagnostic
It’s crucial to fully understand the current state of your organization’s data, systems and overall technology, to evaluate where to invest to gain the maximum benefit. This means taking a close look at systems and interconnectivity, data and data quality, and the way technology is used to deliver, report and monitor projects.

Point 2: Find quick wins
A great way to build momentum is to find and highlight areas of the operation where technology is visibly improving performance. This will prove the value of technology to skeptical Baby Boomers and demonstrate to Millennials and Gen Xers that the organization is forward-looking. Many organizations focus all their efforts on one or two large, multi-year investments that not only fail to deliver their promises, but also foster a wider negative sentiment and resentment towards technology. One obvious starting point for quick wins is data analytics: finding cost-effective ways to get the most out the data you already have (much of which sits in your current systems and tools).

Point 3: Create a clear digital strategy and roadmap
Equipped with a solid understanding of the current technology position, and having gained momentum with quick wins, the organization can now develop a digital strategy and roadmap. It’s important to try to be both pragmatic and visionary, to imagine innovative uses like robot welders or 3D printing of parts on-site. But a roadmap alone is not sufficient. Your technology/digital strategy cannot sit in isolation but should be integrated into your broader business strategy, to put you in the driver’s seat.

Address the people conundrum

Today’s engineering and construction companies may employ as many as four different generations of worker. In the face of rapidly-changing technology, and increasingly complex, large-scale projects, how can they overcome generational barriers to create a high-performing workforce up to such challenges?

Point 1: Create a culture that works for everyone
The classic Baby Boomer tends to be respectful of rules and procedures but resistant to new technologies and processes. As we’ve discussed, newer Millennials are totally comfortable with technology but more likely to shun strict rules and regulations. The answer to this dilemma? Targeted communications with different messages (and media) for different groups of employees, with more direct instructions for the older guard, and more collaborative approaches for the younger members, to ensure they feel part of the solution.

This goes right back to the recruitment process. Many bright young people want to work in ‘cool’ industries that embrace cutting edge technology and adopt an entrepreneurial spirit common to tech start-ups, which presents a wonderful opportunity for companies to embrace cutting-edge technology, both as a route to innovation and efficiency, and a way to attract fresh talent.

Point 2: Balance hard versus soft controls
Soft controls relate to culture, leadership and communication: the way that people think and behave. Baby Boomers may be more comfortable with a top-down, hierarchical organization, with traditional values. But Gen X and Millennials, expect a more contemporary approach that values sustainability and diversity, and gives individuals more personal freedom.

And it’s not just about managing people’s feelings and expectations. Shareholders, customers and the wider public expect companies to practice the right values. Furthermore, employees devoted to ‘doing the right thing’ are arguably more likely to practice hard controls, on the grounds that it makes both ethical and business sense. We’re not suggesting that organizations throw out the rule books; but, as we’ve argued in our Rethinking controls section, regulations and procedures should at the very least be rationalized.

Point 3: Rethink talent management
Both owners and contractors need to embrace technology to build what we call ‘workforce intelligence’. By using data and analytics, companies can assess which skills they need for the next few years as part of a strategic workforce plan, identify attrition rates, and build this into their recruitment activity. For example: If a company is investing heavily in automation, then it may need fewer manual workers but more analysts to manage the ensuing data. On a shorter timescale, a similar approach can ensure that the right people are available for specific projects.

Workforce optimization means utilizing resources effectively, by understanding the capabilities and potential of your high performers, and giving them the platform to build experience and develop fulfilling careers, and addressing issues that could cause them to leave. And finally, workforce analytics is all about improving performance, by understanding how workers collaborate and behave, and spotting gaps.

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